It's the Alibaba stake and cash that are being discounted, as assets typically are on a public balance sheet.
AOL was worth $4.4 billion to Verizon, and was worth several billion publicly traded. Yahoo's operating business is blatantly worth more.
Simple test: show me one example in the last several decades, of a publicly traded company that was sporting a positive balance sheet, with billions in revenue, that traded with a negative market cap. You won't find a single example. It's also the same reason Yahoo didn't trade for a negative valuation prior to Alibaba becoming highly valuable: Yahoo's core business is actually worth something.
The reason why the core business has a negative value is that investors are afraid that Marissa is going to use the money from an Alibaba sale to fund an unprofitable, failed turnaround.
AOL was worth $4.4 billion to Verizon, and was worth several billion publicly traded. Yahoo's operating business is blatantly worth more.
Simple test: show me one example in the last several decades, of a publicly traded company that was sporting a positive balance sheet, with billions in revenue, that traded with a negative market cap. You won't find a single example. It's also the same reason Yahoo didn't trade for a negative valuation prior to Alibaba becoming highly valuable: Yahoo's core business is actually worth something.